British taxpayers face call to bail out the Greek economy

European Commission officials are holding talks this week that could lead to British taxpayers helping to bail out the Greek economy.

It would be the third major bail-out of a eurozone currency, following the £4.3 billion advanced to Ireland and potential liabilities of up to £6 billion to prop up Portugal.

Greece was supposed to have been saved last year but the package required it to raise loans from the markets. Now, its failure to tackle a debt crisis quickly enough has left it unable to borrow. Chancellor George Osborne has ruled out giving Athens a bilateral loan similar to the billions lent to Ireland. However, Treasury sources concede that there is a risk that British taxpayers will end up with a bill.

"We don't want to be part of a second bail-out and there is no proposal to do so," said a Treasury source. "But there is a risk due to the mechanism the previous government signed up to." The eurozone was in more turmoil over the weekend after rumours that Greece was poised to leave the single currency. German Chancellor Angela Merkel's spokesman today denied that a Greek exit had ever been discussed.

Steffen Seibert said she would meet the heads of the European Council and Commission, Herman van Rompuy and Jose Manuel Barroso, this week to discuss the "whole scope of European problems".

"Bail-outs for the Irish and Portuguese already dwarf all the savings to tackle the deficit over the last year. A Greek bail-out on top of that would be astonishingly unfair on British taxpayers and pensioners."

Fellow Tory Philip Davies urged Mr Osborne to "draw a line in the sand" against further calls on Britons, who are not members of the single currency club.

Labour's Alistair Darling, as chancellor, agreed to the creation of an EU-wide bail-out fund a year ago - after the general election but before the Coalition was formed.

He insisted that he consulted Mr Osborne but the Tory says he objected strongly. Since the election, Mr Osborne has negotiated a British opt-out to any such rescues after 2013.

Taxpayers in the UK have already contributed billions to the Irish bail-out, in bilateral loans, EU funds and contributions via the International Monetary Fund.

The UK is also liable for between £4.3 billion and £6 billion to prop up the Portuguese economy, through the EU and the IMF. Greece needs more money because it is expected to default on its debts and its credit rating is so bad that it cannot borrow on international markets.